Comparing Sylvamo (NYSE:SLVM) and West Fraser Timber (NYSE:WFG)

West Fraser Timber (NYSE:WFG) and Sylvamo (NYSE:SLVM) are both materials companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Earnings & Valuation

This table compares West Fraser Timber and Sylvamo”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Fraser Timber	$5.46 billion	0.99	-$937.00 million	($15.44)	-4.46
Sylvamo	$3.35 billion	0.43	$132.00 million	$1.88	19.16

Sylvamo has lower revenue, but higher earnings than West Fraser Timber. West Fraser Timber is trading at a lower price-to-earnings ratio than Sylvamo, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for West Fraser Timber and Sylvamo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Fraser Timber	1	3	4	0	2.38
Sylvamo	2	2	1	0	1.80

West Fraser Timber currently has a consensus target price of $83.20, indicating a potential upside of 20.77%. Sylvamo has a consensus target price of $46.67, indicating a potential upside of 29.52%. Given Sylvamo’s higher probable upside, analysts plainly believe Sylvamo is more favorable than West Fraser Timber.

Dividends

West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.9%. Sylvamo pays an annual dividend of $1.80 per share and has a dividend yield of 5.0%. West Fraser Timber pays out -8.3% of its earnings in the form of a dividend. Sylvamo pays out 95.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. West Fraser Timber has increased its dividend for 3 consecutive years and Sylvamo has increased its dividend for 3 consecutive years.

Institutional and Insider Ownership

40.2% of West Fraser Timber shares are held by institutional investors. Comparatively, 91.2% of Sylvamo shares are held by institutional investors. 1.8% of West Fraser Timber shares are held by insiders. Comparatively, 0.8% of Sylvamo shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares West Fraser Timber and Sylvamo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Fraser Timber	-22.98%	-10.84%	-8.19%
Sylvamo	2.31%	8.36%	2.90%

Volatility and Risk

West Fraser Timber has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Sylvamo has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Summary

Sylvamo beats West Fraser Timber on 9 of the 16 factors compared between the two stocks.

About West Fraser Timber

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir, douglas fir-larch, hem-fir, and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, paperboard products, tissue and towel products, and a variety of other paper grades. Further, it offers bioproducts, including bioenergy and biomaterial. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.

About Sylvamo

Sylvamo Corporation produces and markets uncoated freesheet for cutsize, offset paper, and pulp in Latin America, Europe, and North America. The company operates through Europe, Latin America, and North America segments. The Europe segment offers copy, tinted, and colored laser printing paper under REY Adagio and Pro-Design brands; and graphic and high-speed inkjet printing papers under the brand Jetstar; as well as produces uncoated freesheet papers. The Latin America segment focuses on uncoated freesheet paper under Chamex, Chamequinho and Chambril brands, as well as produces HP papers. This segment also operates integrated mills and non-integrated mills. The North America segment offers imaging, commercial printing, and converting papers, as well as uncoated papers under Hammermill, Springhill, Williamsburg, Accent, DRM and Postmark brand names. It distributes its products through a variety of channels, including retail merchants, e-commerce, agents, resellers, and paper distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.